21/12/2020 | Real estate purchase and sale in Spain
What is the Plusvalia tax in Spain?
The Plusvalía is a local (municipal) tax charged by the town hall on properties when they are sold. It is calculated on the rateable value of property and the number of years that have passed since the property last changed hands. The objective is to tax the increase in the value of the land on which the property stands, some of which is due to improvements to the area carried out by the local government and the community at large.
The base for this tax is the valor catastral (an administrative value that is usually lower than the market value, sometimes considerably so) of the property. The amount due in tax will depend on how long the seller has owned the property: the longer the period, the higher the amount of tax.
If you are a seller and you are resident in Spain, you are better off paying this tax yourself, as if the buyer fails to pay it, the tax authorities will come after the seller.
If you are a buyer and the seller does not live in Spain, you are better off paying this tax on behalf of the seller using funds withheld from the property price. That way you can be sure the tax has been paid. Because if the seller doesn’t pay and doesn’t live in Spain, the tax authorities will come after the new owner.
How do you pay the Plusvalia tax in Spain? You have 30 days from the date of sale to pay the Plusvalia to the town hall.